This week's Silk Road news brings both geopolitics and geo-economics together, in a world that is undergoing complicated changes.
Asia Times article [Trump holds the clock on North Korea while Putin plans his moves] paints the geopolitical picture hinging on the North Korean issue. Kim Jong Un has a surprise two-day visit to China, signifying that China cannot be discounted in the North Korean issue. "Kim is indeed acting shrewdly by anchoring his dealings with Trump on his pivotal relationship with Chinese President Xi Jinping." Nor can one ignore the role of Russia in this situation. President Putin recently held a phone conversation with Xi Jinping. They discussed the North Korean situation in the backdrop of both countries experiencing increasing tensions with the US. Russia is arguing for the lifting of North Korean sanctions. President Moon of South Korea visited Russia last week as well, promoting trade between the two countries. Russia's profile in this situation is getting increasingly larger. The Sino-Russian 'close contact' and presence in the North Korean issue is something to be reckoned with.
The Bloomberg article [In China-U.S. Trade Spat, Treasuries Are Off-Limits for Now] points to the fact that China is keeping shy of making the treasuries part of the trade spat that President Trump has started between the two giant economies. "China, the largest foreign owner of Treasuries, has kept its holdings remarkably steady over the past year even as President Donald Trump ramps up threats of tariffs." The American economy cannot afford China selling its dollar holdings outright. Nor is it a good option for China. China's export-oriented economy is still dependent on the dollar. So is the People's Bank of China for its exchange rate. This puts the two countries in a mutually dependent and awkward position. The US will continue to issue more debt and China will continue to buy enough of that debt to keep its holdings steady.
M. Forough
This week's Silk Road Headlines
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